Is it hard to set up a Saas business that becomes successful?

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JASON LEMKIN

Well, of course.

But — the reasons have changed.

In the ‘05-’07 generation, the biggest challenge most SaaS start-ups faced was the SaaS markets were just too small for everything but CRM and a few other core, established spaces. This “Box” generation all grew relatively slowly for quite some time (by 2016 standards) until the markets grew and caught up with us. The good news was, there weren’t that many vendors. So you could still survive. And the products didn’t even have to be very good, or that complex. Because often, nothing really existed before to do the job.

From ‘08–’11 or so, most new SaaS apps were Too Simple. More entrepreneurs wanted to do SaaS, but the MSPs and MVPs were just too simple. The markets and products had begun to get more sophisticated. You had to do more — a lot more. A lot more functionality. And you needed really insights into how the org was working and the ROI delivered — true dashboard-level visibility of the enterprise. And mobile threw a wrench into everything. The best start-ups quickly took advantage of the rise of mobile (e.g., Dropbox), which really, was unexpected in its strength and transformation. Those that didn’t take advantage were often left behind, even if mobile wasn’t the core interface for their end users. And marketing and capital raising began to make a bigger and bigger difference here than ever.

From ‘12–’15 or so, Traction Ruled the World. Now that the SaaS markets were so much bigger, we could see companies like Slack, Intercom, Talkesk, and many others grow at faster rates than any comparables before.

From ‘16-, the Tech Bar has Gone Way Up again. Machine Learning, AI, and IoT may be trite terms. But the underlying theme is that a rich, nuanced, workflow-rich app is no longer good enough in the enterprise. Now, you need a fairly insane engineering and data science team to deliver the insights and value the enterprise is expecting. A dashboard — even the world’s richest, prettiest, most insightful dashboard — isn’t enough anymore. Many of the best SaaS start-ups have 10+ accomplished engineers from Palantir and Google on their early team. The hackey-MVPs and MSPs are going to have to be a lot more clever to compete today.

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Published on September 2, 2016
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